Reserve Bank of India governor Raghuram Rajan said on Saturday he won’t seek a second term and return to academia when his current tenure expires on September 4, ending months of speculation amid reports of tension with the government.
In a letter to the RBI staff, Rajan said he was proud of having tamed inflation and stabilizing the currency but said he had decided against continuing as the central bank chief after “due reflection” and consultation with the government.
“I will, of course, always be available to serve my country when needed,” Rajan wrote.
Born on February 3, 1963, Rajan received an electrical engineering degree from IIT-Delhi and completed his MBA from IIM.
He went on to pursue a PhD at the Massachusetts Institute of Technology in Cambridge, USA.
He was the youngest chief economist at the International Monetary Fund (IMF) from 2003 to 2006 and was a professor of finance at the University of Chicago Booth School of Business from 1991 to 2013.
He joined the Indian government as chief economic adviser to the ministry of finance and prepared the economic survey for India for the year 2012–13 before heading the RBI.
At the helm of the RBI, Rajan was known to be a reformist and largely loved by the industry and market participants for his consistent and transparent communication.
As Rajan ends speculation on his continuance, HT takes a look at his achievements as the central bank’s chief:
Stabilising Rupee: The rupee, which weakened to a record 68.80 against the dollar in August 2013, stabilised over 10% between September and December 2013 after a number of RBI measures taken on the day of his joining the central bank.
Beefing Up Reserves: Today, India’s foreign exchange reserves are at a record high of $363.23 billion as on June 10.
Easier Banking: Rajan also released on-tap licensing to ease the process of universal bank applications that enable services such as payments via mobile phones.
Inflation-focused Monetary Policy: Under his governorship, the RBI came out with a new monetary framework that focused on bringing inflation down and raising of Foreign Currency Non-Resident (B) deposits to bolster foreign exchange reserves.
Inflation: Rajan’s sustained policy focus helped the RBI bring down inflation to below 5%. Under him, a new monetary framework that focused on bringing inflation down was formalised.
Interest Rates: Lower inflation and stability in currency markets helped Rajan bring down key repo rate to a five-year low. This helped the economic growth and consumer spending.
Outside the RBI
Rajan predicted the 2008 global financial crisis. In 2005, at an event honouring Alan Greenspan, who was about to retire as chairperson of the US Federal Reserve, Rajan delivered a paper on “Has Financial Development Made the World Riskier?”, and he argued that the disaster might be looming.
IMF chief Christine Lagarde said at an RBI event in March 2015 that the world should have listened to Rajan.